For years, the employees at Silverman’s Inc. had no major health insurance claims, but that didn’t stop Blue Cross/Blue Shield of North Dakota from increasing its rates 14% and cutting back on services last year.
Robin Silverman, who co-owns the Grand Forks, North Dakota-based men’s retail clothing store, had tolerated increases before. This one, she says, drove her to action. With 14 employees and $1.1 million in sales last year, Silverman sought out a better provider. After two months of discussion with employees, pouring over medical bills from last year, researching her firm’s limited options, and networking with other business owners, she was back at square one.
Silverman went back to Blue Cross/ Blue Shield for a plan that would suit her employee’s needs. In April, she and her staff chose Basic Blue, a zero-deductible option that pays 70% of medical costs. “After adding up what our past year’s visits would have cost had we paid that 30%, we realized the zero-deductible put us ahead,” says Silverman, adding that the company cut its healthcare cost by about one-third, from $2,500 per month to $1,700 a month. “Our employees also have less taken from their paychecks now, so we came out ahead all the way around.”
Healthcare costs are on the rise, and small companies have been hit hardest, according to a report from the Kaiser Family Foundation, an independent philanthropic organization dedicated to healthcare issues. Firms with three to 199 employees saw a 12.5% cost increase from 2000 to 2001, while the smallest firms — those with three to nine workers — saw the largest increase at 16.5%. Larger firms with more than 200 workers saw their premiums increase 10.2%.
The high costs are forcing small businesses to rethink whether to offer health insurance at all, according to another Kaiser survey, which found that just 56% of small businesses with three to nine workers offer coverage, compared to 72% of businesses with 10 to 24 employees. Among small firms that do not offer coverage, 72% say cost is a very important reason.
Management consultant and healthcare economist Nan Andrews Amish of Big Picture Perspective in the San Francisco Bay area, cautions employers not to seek out the cheapest solution, but to instead look for high-quality care. “Most patients who have had a healthcare concern equate choice with quality,” says Andrews Amish. “They want to stay with their current doctor, and they want to have the choice in who they see.”
One way to make sure that happens, says Andrews Amish, is to opt for large deductible plans with high choice. “This way,” she adds, “the premium is reasonable, major medical bills are paid for, and the employee can stay with his or her current health providers.”
Silverman strongly advises business owners seeking relief to ask more of their providers and to thoroughly research employee needs and the healthcare system itself. “An exhaustive search of your firm’s healthcare situation and options are absolutely critical,” says Silverman. “Most business owners think they don’t have time for it, but in reality